Individuals were banned from owning gold in the United States for decades. This was followed by a crazy bull market for precious metals with a sudden end. This is what we see in history over and over again. When the economy cools and inflation rises, people sometimes look for what is tangible, safe and secure and away from digital and paper derivative assets.
All of this is history that tells us that owning gold during a time of inflation and stagflation is a way to help grow your portfolio if the price of gold rises. The following graph shows the performance of gold compared to all other assets in “real” terms, with the stock markets falling by more than 50% at the time. Watch gold become the most important growth asset during this time of crisis. Anyone considering buying precious metals, Gold American Eagles, Proof Gold American Eagles, certified gold coins, as well as gold and silver ingots, should carefully consider and evaluate the associated acquisition risks and costs before making the investment, and should always consult their financial and tax professional and carefully evaluate all risks associated with acquiring precious metals before making the investment.
In his 1969 article “Speculations on Gold Speculation”, the well-known economist Fritz Machlup concluded that the price of gold, of 35 US dollars per troy ounce, which was applied in Bretton Woods, would decrease significantly if government demand ceased to exist. What seems clear is that gold was simply accumulating more and more pressure, as the catalysts that baffled investors from the start finally made the price disappear. The wild 1970s and the subsequent falls in the price of gold have been engraved in the memory of many investors. However, from 1974 to 1976, the price of gold fell by more than 40% over a two-year period.
However, the need to protect the purchasing power of your portfolio from stagflation requires analyzing what happened to the prices of precious metals during the 1970s: gold multiplied by 8 and silver 11 times. Gold had served as money for thousands of years until 1971, when the gold standard was abandoned for a fiat currency system. The decision to buy or sell precious metals with outside funds or within a gold IRA or a gold-backed IRA, and which precious metals to buy or sell, is the customer's sole decision, and purchases and sales must be made subject to research, prudence and judgment of the customer. In 1979, a second uptick in oil after years of global energy inflation, together with global political instability, plunged gold investors into a final buying panic that ultimately peaked gold prices in January 1980.
It is fascinating to see that the current bull market for gold shares a very similar pattern — until now — to that of the gold market of the 70s. The current upturn in gold has some notable similarities with what happened with gold prices in the 1970s. Gold is a global monetary asset and its price reflects global sentiment; however, it is mainly influenced by the United States. We encourage you to learn more about the gold market, not only about the relationship between stagflation and gold, but also about how to successfully use gold as an investment and how to trade it profitably.
When the ban on gold in the United States was lifted in late 1974, the price had risen to nearly 200 U.S. dollars. This is where gold investors lose touch with economic reality and pursue ever higher prices in a feedback cycle of sky-high prices, “new-age thinking” and greed. .